Symposium | Beyond Neoliberalism Part II

The Care Economy: More State, Less Market

By Alix Gould-Werth

Tagged Economicseconomyneoliberalism

Every society must choose which goods and services—from education to roads to health care—to provide publicly and which to relegate to the realm of individual responsibility. Over the past five decades, political actors have used the dominant ideological paradigm, often referred to as “neoliberalism, “to justify moving a wide range of goods and services into the private sphere. When deployed in the social policy arena, neoliberalism treats social problems as personal issues, best addressed by individuals who are labeled “failures” if they cannot address them alone. But at the same time as neoliberalism calls for unfettered markets, it promotes policing individual behavior to generate a compliant and efficient workforce, and it has been used to reshape welfare state programs into profit-generating instruments for private enterprise. Indeed, the political goal of facilitating profit for the powerful underpins the entirety of this contradictory but forceful ideology.

This context is what makes the $950 billion government investment in care proposed in the Build Back Better legislation such a significant bellwether. The left is no longer playing defense, seeking simply to insulate public investment from privatization. Instead, it is reexamining the care services so often constructed as belonging in the private domain—to be provided and purchased by families without public support or somehow done without—and delivering legislation signaling that investments in one person’s child or parent or family member with a disability serve all of society.

But the Act remains in limbo at the writing of this piece, as it has for so many months of the Biden presidency. In this unsettled moment, the tensions prolonging the policymaking process are clearly observable. The neoliberal ethos, in which policy is a tool for creating unregulated markets and willing workers, continues to shape our policy debates. Yet an opposing paradigm is emerging, one characterized by public investment, regulation for the public good, and the assertion that a person’s inability to self-manage is a systemic failure rather than a moral one. Across the legislation’s care provisions, the current stalemate is accompanied by hints of ideological opening. The cases of paid leave, childcare, and the child tax credit are particularly illustrative.

In the middle of the twentieth century, policymakers recognized that private markets would neither naturally stabilize the macroeconomy nor meet the basic needs of the citizenry. They established programs to insulate Americans from the income shocks that accompany life events like unemployment, disability, the death of a spouse, and old age. Yet, during this period most women who worked were immigrants, people of color, or had low socioeconomic status. And so sexism joined the trifecta of xenophobia, racism, and classism to prevent the development of public programs addressing life events that disproportionately disrupt the earnings trajectories of women, such as childbirth. By the time the female workforce had grown and whitened, neoliberalism had taken root and the welfare state was being retrenched rather than expanded.

The proposed establishment of a federal paid leave program, which builds on the scaffolding of state temporary disability programs established in the 1940s, picks up where the income support programs of the mid-twentieth century left off. Political actors that use neoliberal ideas to oppose government regulation of workplaces, like private-sector employers and trade associations, argue that paid leave is a benefit best extended by employers. Yet, only one in five workers has an employer that provides paid family leave, and the figure is closer to one in 20 for workers in the lowest-paid occupations. Build Back Better’s proposed paid leave program is permanent and would provide all people with recent work history who meet a low minimum earnings requirement ($2,000 in combined earnings and unemployment benefits over two years) four weeks with pay to care for a new child or to address serious medical conditions that arise for themselves or their loved ones. Wages would be replaced on a sliding scale, with the lowest-paid workers receiving 90 percent of their typical earnings. Program design elements like universal eligibility and partial income replacement mirror pre-neoliberal social insurance programs. At the same time, the design includes adjustments that preclude the use of tactics that neoliberal regimes have deployed to curtail the provision of income supports. For example, workers classified as independent contractors are explicitly eligible for benefits.

This is not to say that the proposed paid leave program, as historic as it would be, remains unaffected by the intellectual and political currents of neoliberalism. The proposed duration of benefits has shortened to just four weeks, far less than the 16 weeks of parental leave guaranteed by the European Union and the 40 weeks of parental leave needed to achieve the greatest reduction in infant mortality. Unlike pre-neoliberal programs like Unemployment Insurance and Social Security, the proposed paid leave program includes a private option. If employers ensure that their leave-taking employees can return to their job and offer benefits at least as generous as those offered through the public program, they can opt to provide private benefits directly to their employees (or use commercial insurance) in lieu of public program participation and receive government reimbursement for most of the cost. What’s more, several lines of argument used to justify the program dovetail neatly with the neoliberal goal of stoking the fires of production. In fact, in their efforts to promote paid leave, even progressive advocates lean on evidence that paid leave programs yield increases in worker productivity, growth of the labor force, and boosts to GDP.

For all that, though, the proposed paid leave program at its core remains opposed to the neoliberal project. The program would be a new government institution directly funneling public dollars to ordinary people without the surveillance and regulation that characterize neoliberal income support programs—the first since 1974. This naked opposition to neoliberal thought may be one reason that corporate interests have flexed their muscles to make paid leave the most vulnerable care provision in the Build Back Better Act. Indeed, it was removed completely from a White House framework, only to be reinserted following the outrage and advocacy of female elected leaders and activists. This back and forth among Democratic leaders is evidence of equal strength in two opposing forces: neoliberalism and a post-neoliberal, feminist paradigm.

Perhaps Build Back Better’s least-contested care provision is its investment in childcare services. The embrace of this provision is at least in part a response to the dismal outlook for childcare in the United States: In 2018, about half of families lived in census tracts where three young children competed for one childcare slot, and since then the childcare industry has contracted further under the pressures of the COVID pandemic. When families can secure childcare, the price is high—averaging $10,000 annually—and the quality is variable. The proposed six-year plan aims to serve children who have not yet started kindergarten and would increase the supply of care, improve its quality, raise wages for childcare workers, and ensure that families who make less than 250 percent of the state median income have access to childcare without expending more than 7 percent of their income.

Within the contours of this legislation, one can see policymakers thoughtfully reacting to our current liminal ideological moment by incorporating elements of neoliberalism at the same time as they act against its core tenet of treating social problems as individual responsibilities. In contrast with other proposed childcare legislation, Build Back Better’s provisions do not create new institutions. Rather, they lean on and bolster the existing private childcare market by funneling resources to private providers and subsidizing costs for families. This leaves space for large corporations to preserve or expand their share of the childcare market, but also supports more typical private providers: nonprofits and small businesses with slim profit margins run by women, often women of color operating out of their own homes. At the same time as it embraces the private market, the proposed legislation cuts against neoliberal rationality with its provisions requiring regulation to ensure safe and nurturing environments for children and substantial public investment in a service once relegated to the private sphere.

The paid leave program would direct public dollars to ordinary people without the surveillance and regulation that characterize neoliberal programs.

As is the case for paid leave, progressive advocates have embraced the economic case for federal investment in childcare. When parents can access affordable childcare, they argue, labor force participation increases, and children are shaped into efficient future workers through the development of their human capital. These economic justifications fall into a familiar neoliberal frame: Government dollars should be used to ensure that people serve the market as effective laborers. Those who argue against the popular childcare provisions of Build Back Better also fall back on neoliberal frames, focusing on market distortions.

What should we make of the varied intellectual terrain upon which this policy proposal rests? Political scientist Sanford Schram reminds us that neoliberal policy projects could not erase the intellectual and political history that preceded them. Unable to eliminate the welfare state altogether, neoliberal policymakers altered it to serve the market in a kind of “Plan B for market fundamentalists.” Schram argues that, similarly, our next policymaking paradigm must emerge from neoliberalism itself. “The road beyond neoliberalism,” he writes, “is one that goes through it, not around it. That means engaging it, not ignoring it, and in the process trying to bend it to better purposes and more humane ends.” The childcare proposal before us travels this road, embracing internal tensions in an effort to enable broad access to high quality, affordable childcare provided by workers receiving fair wages.

While the design of Build Back Better’s childcare components suggests a symbiosis between neoliberal and post-neoliberal ideologies, the debate around its proposed enhanced Child Tax Credit exposes ideologies at loggerheads. Market fundamentalists argue that family members can work for pay, provide care, and meet their expenses without state support. The relative dominance of this view among policymakers means that when new children join families, families alone bear the costs of diapers and other essentials. At the same time, they receive lower earnings from paid labor as they spend more of their productive time providing care without pay. As a result, poverty rates are far higher for families with children than families without them, leading some progressives to argue that the state should provide relief from the costs of raising children and others to push for compensation to the parents and guardians who provide care for children to the benefit of broader society.

Interestingly, however, the original Child Tax Credit, which was enacted in 1997 and provided to families once a year at tax time, was not the brainchild of anti-poverty advocates. Rather, it was a tool used by proponents of neoliberalism as they bent the tax and transfer system to reshape the labor market. Only tax filing units with substantial earnings from work were eligible for the original credit—meaning the lowest-income children were excluded from the economic support it provided. By channeling government resources to households participating in the paid labor market, tax credits can make low-wage work more sustainable for families, in this case shaping markets to serve the interest of profit-maximizing firms who employ workers with children.

The 2021 American Rescue Plan made three tweaks to the existing credit that radically altered the ideological space it occupied. First, it increased the maximum annual credit amount from $2,000 per child to $3,000 for children aged six to 17, and $3,600 for younger children. Second, it divided the income support into monthly as well as annual allotments. Finally, and most significantly, by making it fully refundable, it extended the credit to tax filing units with no or low income from work in the formal labor market. By providing significant monthly support to all households with children regardless of parental earnings, the enhanced child tax credit implicitly recognizes that raising children itself is work, that this work benefits society as a whole, and that public dollars should be used to support this work. Progressives are not alone in lauding the enhanced credit, and the support of prominent conservative thinkers suggests an ideological shift across political divides.

The American Rescue Plan innovations ended with the 2021 calendar year, and the Build Back Better plan seeks to extend them, along with their one-two punch to neoliberal sensibilities, for calendar year 2022. The arguably most important tweak—full refundability—would be extended permanently. These changes have not been swallowed easily by proponents of neoliberal ideas, who are arguing vociferously to require that children have a parent who works in the formal labor market for their household to receive the credit. Such a requirement would be cumbersome to implement, cut millions of households off from income needed to offset the costs of raising children and promote healthy child development, plunge children back into poverty, and likely have fairly meaningless effects on labor force participation. Indeed, research finds no effect on work stemming from the 2021 changes, and the increased income could even facilitate work by allowing parents to pay for transportation and work supplies. Still, a work requirement would return the child tax credit to its prior ideological space by signaling that unpaid care work alone is not deserving of state support, while the maintenance of a low-wage labor force is.

As a result, the plain question of whether a work requirement should accompany the enhanced Child Tax Credit has emerged as the most prominent lightning rod among the Build Back Better care provisions. The substantive requirement, and its companion bureaucratic hurdles, would prevent credit receipt for participants in a low-wage labor market characterized by low job quality and high turnover. This concrete concern animates the impassioned advocacy against the work requirement on the left. But even more, the work requirement is a signal. Its inclusion would indicate that we have not determined the mid-1990s neoliberal reforms to the welfare state as failures to leave behind, but rather as successes to be replicated. In contrast, if the Build Back Better Act passes with a permanent fully refundable child tax credit and no work requirement, it would signal the rise of a new policy paradigm. There is much at stake for both sides, and both have dug in their heels resolutely, leaving us at an impasse as of this piece’s publication.

As an academic exercise, we can use the current standoff to illustrate clashing neoliberal and post-neoliberal ideologies. But this is not a theoretical exercise. The fate of the Act’s care provisions have real implications for the wellbeing of our population and the functioning of our economy. If they do not pass, more children will experience health problems, mothers will face depressed lifetime earnings, and 6 million children will lose eligibility for the Child Tax Credit entirely because their family incomes are too low.

Though the current paralysis is dangerous, it may foreshadow change. The policy interventions that the left fears losing would not have been considered two decades ago, when a logic of privatization ruled. We can see the heavy pull of neoliberal ideas surfacing in the policy design and discourse around paid leave, child care, and the child tax credit. But we can also see the emergence of a new paradigm in the proactive move to bring once-privately-provided care services into the public sphere with unprecedented government investment. When the legislation’s fate is decided, it will be tempting to read the settled tea leaves as the final pronouncement on the fate of neoliberalism in the twenty-first century. But in this moment of uncertainty, our analytic powers are sharper. The tensions this debate exposes show that we are in a moment of potential, but not certain, ideological transition.

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Alix Gould-Werth is the director of family economic security policy at the Washington Center for Equitable Growth.

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